The persistence of Chinese monopoly in Indonesia's salt business and marginalisation of local salt farmers

Abstract

This paper reviews reasons for the domination of the Indonesian salt business, from the colonial to the New Order era, by the Chinese who are ethnic Indonesian citizens. The authors argue that this domination and subordination by middlemen induces a negative impact on market segmentation. Consequently, local farmers have limited market access and it appears that these salt farmers are pressurised by middlemen and the Chinese. This study used a historical method with an economic-political approach. Due to the New Order’s policy that placed the economy as a ‘commander’, business opportunities were widely open to the Chinese and even to foreign investment. During this era, there were middle-scale and large-scale salt companies, all of which belonged to the Chinese. Meanwhile, small-scale companies were non-Chinese or native Indonesian. The Chinese dominance in the salt business was not something new, and ironically, it has left almost no place for locals.

Keywords:

• Chinese monopoly
• dominance
• salt business
• new order
• local salt farmers

Acknowledgments

The authors gratefully acknowledged the research fundings from the Ministry of Research and Technology/National Research and Innovation Agency of Republic Indonesia, under Research for Doctoral Dissertation Program Grant number 225-11/UN7.6.1/PP/2020. We would like also to acknowledge the support and contribution from the Ministry of Education and Culture and Ministry of Marine and Fisheries Republic of Indonesia. Our sincere thanks to Noor Naelil Masruroh for her contibutive comments and suggestions to improve this work.

Disclosure statement

All authors declare that they have no conflict of interest.

Data availability statement

The primary data is obtained under the colonial and the New Order period. These data include salt production, salt price, salt trade, as well as salt actors and businessmen. It was obtained from various publications, for instance from Kompas, a national newspaper in which has been published since the New Order; statistical report from the Central Bureau of Statistics in which have collected data of salt production and trade since pre- independence to present. Tables 1–3 mainly contains data from Central Bureau of Statistics. Meanwhile data in Table 4 was obtained from the selected interviews. The recordings and transcriptions of the original interviews are not available due to confidentiality requirements.

Additional information

Funding

This research and publication was supported by the Directorate Research and Community Services, Ministry of Research and Technology/National Research and Innovation Agency of Republic Indonesia, under Research for Doctoral Dissertation Program, Grant number 225-11/UN7.6.1/PP/2020.